Special Relationship between Policyholders and Insurance Companies

Texas, along with many other states, recognizes that a special relationship exists between insurance carriers and their insured.  Insurers have a fiduciary relationship toward their insured which means they owe their policyholders a duty of good faith and fair dealing.  Insurance bad faith liability is based on an insurance company’s distinct advantages when negotiating with prospective policyholders.  The insurer has vastly superior bargaining power, size, and knowledge of relevant issues and the law.

An average policyholder might face similar disadvantages when dealing with any large corporation.  These advantages are compounded in the insurance context because of the extreme stress associated with insurance claims disputes which include significant property loss, serious illness, personal injury, or the prospect of liability for a judgment.  The vulnerable position of policyholders with respect to an insurance carrier also includes the dual role of the insurer as a party with a duty to handle customer claims despite the financial benefit of denying, delaying, and lowballing claims.  Insurers must comply with their obligation of good faith and fair dealing in adjusting and paying policyholder claims.

Bad Faith Practices Insurance Companies Use to Decrease Payment of Claims

Fort Worth insurance bad faith attorneys at FH Law Group tenaciously take on insurance carriers that fail to handle the claims of policyholders on a timely basis and deny or lowball valid claims.  While we accomplish this goal through alternate dispute resolution mechanisms in certain situations, we are prepared to pursue breach of contract and insurance bad faith claims to pursue our clients’ interests.  Some of the types of bad faith practices we handle include:

• Refusal to Communicate: Insurers have a duty to respond to their policyholders regarding the status of their claim, grounds for denial, and answers to other reasonable questions.
• Intimidating Policyholders: While insurance adjusters generally are amicable, representatives for insurers sometimes resort to threats and intimidation to discourage an insured. For example, insurance companies often accuse policyholders of arson or insurance fraud when denying fire damage claims.
• Denial without a Reasonable Justification: While denial of an insurance claim does not constitute bad faith, the insurer must conduct a reasonable investigation and have a reasonable basis for denying the claim.
• Intentionally Misrepresenting or Hiding Information: Insurance companies have a fiduciary relationship with their policyholders, so insurers are not permitted to misrepresent or withhold material facts relevant to a policyholder’s claim. Insurers cannot remain silent about a provision in a policy that grants coverage while focusing on another provision to deny a claim.
• Changing Policies without Notice: If an insurance carrier attempts to underwrite new exclusions without informing the insured and obtaining consent, this act can constitute insurance bad faith.
• Refusal to Defend: Insurers cannot refuse to defend a policyholder under a liability policy without a reasonable basis.
• Delays without Reasonable Grounds: Insurance companies know that delaying a claim can be a powerful tactic because policyholders might face dire financial or personal challenges while their claim is unpaid. By contrast, insurance companies experience windfall profits by delaying payment on claims because money that should be paid out to an insured remains invested by the insurer.  Unjustified delays in adjusting or paying a claim can be the basis of bad faith liability.
• Lowballing Settlements: Insurers cannot lowball policyholders with claim settlement offers unreasonably below the value of the claim.
• Policy Cancellation: Policyholders cannot have their policy canceled merely because they made a claim when the insured is not at-fault.

Talk to an Experienced Tarrant County Insurance Bad Faith Attorney Today

These are just a few examples of bad faith practices that insurance companies use to deny, delay, and underpay legitimate claims.  If your insurer is not communicating with you or dealing with you in an unfair or unethical manner, you might have a right to pursue a lawsuit.  At FH Law Group, we tenaciously pursue the maximum recovery for our clients in Fort Worth and the surrounding areas of Tarrant County.  Contact us today for a FREE consultation at (817) 697-4400 or visit our website.